(Reuters) – McDonald's Corp. ( MCD.N ) blew analysts' forecasts for earnings and sales on Monday, helped by the strength of overseas markets and US consumers spending more on average to spend their restaurants.
Shares In the world's largest fast food chain, sales increased nearly 5 percent as global restaurant sales surpassed Wall Street forecasts, helped by the strength of mature markets in the UK and Germany.
The stock was the top gainer of the Dow Jones Industrial Average .DJI.
The results underscore the success of Steve Easterbrook's multi-year turnaround plan, which was introduced in 2015 to update the McDonald's menus, integrate more technology into stores, and improve the customer-friendliness of outlets.
New changes also included the addition of high-margin "gourmet" burgers, which use fresher and more expensive ingredients, costing $ 6 or $ 7 per time, and new $ 1 to $ 3 options.
McDonald's and other fast-food chains have focused on winning over customers with cheap options while battling for a bigger share of a cake that is not growing. However, Monday's results indicate that although this might work, the average check value in its US restaurants is rising.
"The Value Price menu gets people in, but people spend more … People still want a bunch of important McDonald's articles like the Quarter Pounder and the Big Mac," analyst Ivan notes Feinseth of Tigress Financial Partners.
"(They) are still the biggest sellers."
Same-food sales in its most profitable market, the US, increased 2.9 percent, down 2.7 percent / E / s, according to Thomson Reuters I / B.
Worldwide sales of stores, which have been open for at least 13 months, rose 5.5 percent, slightly above the average 3.94 percent estimate. The international markets were led by Germany and the United Kingdom, where sales rose despite difficult weather conditions.
"(This) shows the power of the brand … worldwide, the numbers were excellent," said Peter Saleh, analyst brokerage BTIG. "The results were very impressive, actually more impressive than we had originally expected."
Excluding items, the company earned $ 1.79 per share, exceeding its estimate of $ 1.67. Revenues were down 9 percent year over year, as the company sold more McDonald's own outlets to franchise companies to cut costs.
Net income increased from $ 1.21 billion, or $ 1.47 per share, to $ 1.38 billion, or $ 1.72 per share.
The company's stock was down 7.9 percent this year, underperforming Dow U.S. Restaurants Index .DJUSRU, which lost only 0.7 percent.
Reporting by Aishwarya Venugopal in Bengaluru; Arrangement by Saumyadeb Chakrabarty and Patrick Graham